Is the American Left Ineffective in Economics?

“Ian Fletcher is Senior Economist of the Coalition for a Prosperous America, nationwide grass-roots organization dedicated to fixing America’s trade policies and comprising representatives from business, agriculture, and labor.” http://www.prosperousamerica.org/2011/02/23/ian_fletcher/

Mr. Fletcher wrote an article in HuffPost this week titled ” Why Is the American Left So Ineffective in Economics?” http://www.huffingtonpost.com/ian-fletcher/why-is-the-american-left-_b_1142615.html?ref=politics&ir=Politics . On my first reading of this article, I sped through it cursorily, with general agreement and approval, book marking the link for further reference. As the day went on the article remained stuck in the back of my mind, for there was something about it that disturbed me, but I couldn’t quite figure out why. I looked up Mr. Fletcher’s credentials and they seemed good and certainly not one of being a Corporatist economist. The Coalition for a Prosperous America appears a worthwhile middle-of-road organization, whose supporters include labor unions, as well as medium and small businesses. They look askance at current US trade policies and that is a view with which I agree. Mr. Fletcher has a book titled: “Free Trade Doesn’t Work” http://www.freetradedoesntwork.com/ which people I respect like Fritz Hollings and Thom Hartmann have praised. In it he discusses how there is a free-trade hegemony of both Democrats and Republicans representing the Washington establishment and marginalizing all the voices who disagree with free trade policies. This hegemony is what I describe as the Feudalist Corporatocracy. This is a man with who I’m in general agreement, why then my discomfort with his thesis in this article?

This article opens up with the following paragraph: “Anyone who’s still in a state of denial about the thesis implied by the title of this article can stop reading right here. I’ll just assume it’s obvious enough that we can take it as a given.” He’s right, the thesis implied in the title is indisputable. The Left has been ineffective in combatting the economic policies started by Ronald Reagan’s election and has been in constant retreat from the onslaught of right-wing economic policies. This has been true to such an extent that Bill Clinton reaffirmed Alan Greenspan as the head of The Federal Reserve and Barack Obama reaffirmed G.W. Bush’s choice of Ben Bernake. Both of these men are little more than philosophical minions/co-dependents of Wall Street and the Big Banks. Where I take issue with Mr. Fletcher is in why he believes the Left’s economic weakness has come about. To me his view of the origins of this Left Wing retreat is shortsighted and ignores the 800 pound gorilla in the room. If we don’t understand the causes of problems we face, then no matter how prescient the analysis of their nature, we are almost powerless to combat them. Since the article in question is rather brief, I’m going to dispute it point by point.

“I think there are basically four reasons why the American left has, since the late 1970s, lost almost all of its traction on economic issues, despite successfully imposing on the country for the previous 40 years a basically New Deal economic ideology.

The first reason is the gentrification of the left. If you compare who runs the Democratic party on a day-to-day basis with who ran it in 1932, or even 1962, there’s been nearly a clean sweep of old-school ethnics and working-class people and their replacement with yuppies. Even if the bosses who ran the Democratic party in 1932 were of middle-class or above incomes as a personal matter, their social origins usually were not. This fact usually gets ignored, not least because almost everyone with the wherewithal to comment on it (including yours truly) is themselves a yuppie.”

I believe that the “gentrification” of the Left is a myth created by effective use of right-wing memes created in the late 60’s and promoted by Yuppie publications like New York Magazine, a pseudo-liberal publication that practically invented the term “Limousine Liberal”. The dapper, dandy, journalist Tom Wolfe had much to do with it in articles like “Radical Chic and Mau Mau’ing the Flak Catchers” http://www.tomwolfe.com/RadicalChic.html “Radical Chic” was at first coined by Mr. Wolfe in a hilarious description of a chic party given by Leonard Bernstein in his apartment, to hear a presentation by “The Black Panther Party”. Picked up by the Right, this became a meme used to ridicule Left leaning people as mostly effete dilettantes, out of touch with the working classes. Implicit in this formulation was also the idea of the effete intellectual, out of touch with average people, lodged in an “Ivory Tower”. It got a lot of play during the Viet Nam years, with the AFL-CIO supporting the war and many average Americans offended by protests and uprisings connected with Civil Rights and Anti-War activity. It was then and now, an unfortunate bit of mythology promulgated by operatives predating Rove and Norquist, that now do the bidding of the Koch Brothers and their like. The arrival of OWS and the ascendancy of its messages resonating with the Left and Center, shows that the supporters of economic equality are decidedly not Yuppie in nature. OWS is of course all about economics.

As far as the part of the line of reasoning that claims that the leadership of the Democratic Party is now gentrified, compared to its past leadership. That is a bit of common wisdom that seems true, but in fact is false. The leadership of both parties has always ranged from upper middle class to patrician. The social origins of many of the party’s leaders always were diverse, that is true, but the fact is that getting used to being wealthy is quite easy to do and poor origins do not necessarily make a rich liberal, or a person who identifies with their roots. That Mr. Fletcher is himself uncomfortable with this part of his thesis is indicated by his need to include the caveat of social origins. Political America has always been run by Patricians and the upper middle classes. Their leaning right or left determined by their ethics, intellect and ability to empathize. Mr. Fletcher says so himself later on: “A major part of the problem here is that 100 percent of the political power in the United States is monopolized by the top 10 percent of the population.” This is exactly true and always has been. Mr. Fletcher’s first point fails.

“This points to the second problem with the contemporary American left: it has exchanged equality as its primary goal for diversity. Now one can argue this either way, and I don’t do culture-war issues, but the hard fact is that one can’t prefer diversity to equality and expect equality to be the outcome. They are simply not the same thing. One can claim to be in favor of both, but strategic choices have to be made, and either one or the other must come out on top”. The real problem with diversity, from a leftist point of view, is not that it’s a bad thing per se.

The real problem is that diversity intrinsically tends to reduce human solidarity. Solidarity is the emotion people feel towards others that makes them care about the fate of people who would otherwise be strangers. It is thus an essential basis of any political tendency that would impose policies designed to reduce economic inequality.

This author sets up a false dichotomy here. Economic equality and social diversity are not opposing ideas, they are ideas that can rise or fall on their own merits. Those political thinkers that I respect haven’t made the exchange that Mr. Fletcher uses to bolster his thesis. Economic equality and the honoring of ethnic/racial/sexual diversity are simultaneously goals that I and many others seek. People are different. Embracing those differences enriches us as a culture and in fact has been considered an American ideal for almost a century. Those who see the embracing of human diversity as threatening, are the people who believe “different” is bad and who are in need of enlightenment. Is the full acceptance of blacks, Jews, Muslims, Gay people, etc., something that the Left shouldn’t strive for as much as it strives for economic equality. Isn’t what Mr. Fletcher fears really the same thing that made populism ineffective, due to its inherent prejudice against those thought of as not having the right stuff to be “Real Americans”.

“This brings us to the third big problem with the American left. Since the Democrats decided in 1981, under Democratic Congressional Campaign Committee chairman Tony Coelho, that they could seek (and get) corporate money on the same scale as the Republicans, there has been a yawning gap between the interests of those who finance the party and its nominal ideological commitments. This gap doesn’t exist for the Republicans, who genuinely believe in the pro-corporate policies they impose, and this is a big part of why that party is more effective. It isn’t condemned to talk out of both sides of its mouth at once.”

Mr. Fletcher blandly asserts something that has never been true. Since the beginning of this country and the beginning of either party, their financing has mainly derived from people of wealth. The two Roosevelt Presidents came from “Old Money” and derived their campaign financing from people of wealth. Each for their own purposes nevertheless opposed corporate power, as did their backers. Does Mr. Fletcher really believe that up until 1981 the Democratic Party was financed mostly by Unions and by common people? Since he apparently does, he is wrong, to paraphrase his own beginning to this article: Anyone in denial that the major financing and influence of both parties has come from the wealthiest Americans can stop reading here.

The fourth reason for the economic ineffectiveness of the left is the simplest: most leftists find economics boring. They tell me this all the time when I try to talk to them about things like the trade deficit. There are very few leftist organizations (the Union for Radical Political Economics and Economic Policy Institute are about the only big exceptions) that really do economics in any technically substantial sense. As a result, there’s very little serious intellectual energy invested in the subject.

Do readers of this blog find economics boring, whatever your political philosophy? I think not, I certainly don’t. For that matter neither does Krugman, Roubini and Baker to name a few with credentials equal to, or surpassing those of Mr. Fletcher and who are politically active. Who is this man reading and who is he talking too? I have no doubt there is much in Mr. Fletcher’s work that I would not only find interesting, but that would also align with my own musings. Why then did I take the time to refute this well-meaning, if wrongly simplistic article?

As I mentioned at the break point there is an 800 hundred pound gorilla in the American room that Mr. Fletcher recognizes but ignores at our peril. That beast is an amalgam of like interests that coalesced after Barry Goldwater’s loss in 1964 and who have literally put billions since then, into gaming our political system and funding an unprecedented Right Wing propaganda blitz that equals that of Goebbels in his prime. We know some of the names like the Koch Brothers, Mellon Family, DuPonts, Waltons and the Murdochs, others like to maintain low profiles. This combination of wealth to back candidates, control mainstream media and produce intensive lobbying has created this weakness, this inability of the Left to influence economic issues. Its’ cause has been that they have been outspent monetarily, out foxed in debate and incapable of compact messaging.

All the well-meaning books and articles by people of Mr. Fletcher’s goodwill, that don’t address the buying of our society and political system by this loose cabal of economic elitism, does us all a disservice. The red herring of having a losing argument assumes a level playing field. It’s not that those favoring economic and social equality haven’t been paying attention, it’s that we are only now metaphorically learning to shoot at people who’ve outdrawn us, to paraphrase Leonard Cohen. There is a lot of catching up to do and articles that superficially discuss real problems, demolishing straw men, rather than explaining that an unprecedented concentration of wealth has unbalanced our political system is not helpful. The article I’ve discussed here is relatively short, so perhaps you can read it and see if my critique is off base. If you feel it is I’d like to know your own thoughts on why the Left Wing seems impotent on matters of economics.

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39 Responses

Something needs to include how left economists (Brad DeLong, and sigh my hero Paul Krugman), before Clinton and advising Clinton and implemented with Clinton went whole hog for free trade, and that has devastated manufacturing, which 20 years later the same economists tell us is America’s last best hope.

And the pricks like DeLong aren’t recalcitrant in the slightest. And I will agree with your author along this regard, living in the academy with tenure and stellar salaries and speaker fees has corrupted most of the self-claimed liberal economists. Not a damn bit of difference.

Krugman confuses me: in the name of C02 reduction he seems to advise fair trade policies, namely tariffs against C02 polluters, but he seems to be against the same tariffs when applied to child labor exploiters, worker safety, living wages, etc.

I think part of the problem too is that the true left economists like Dani Rodrik are labeled “heterodox” economists and are not allowed into either freshwater or saltwater economics departments.

And finally, I’d love to have a talk with Krugman over “The perfect is the enemy of the good.” While I agree with Krugman that Keynesian economics really seems to be the right model for the economy, if the Republicans make it such that there is just no way the right, correctly sized Keynesian stimulus can be applied to the economy, do we do more damage by applying the Obama/Geithner piss poor too small stimulus?

If Keynes is simply unavailable, ruled out, what would Krugman next advise? Maybe we would do better to look in that direction if our leaders lack the balls to do the right thing.

A plutonomy does not work like a democratic economy based on democratic capitalism.

Thus, analysis of systems, facts, and figures that occurred prior to the morph of our democratic economy into a plutocratic plutonomy will never work, no matter whether the participant is left, right, or center.

While you raise an interesting point, I think even more troubling is that ours is a consumer economy. There is no way that the spending of 1% can support a robust consumer economy. A larger percentage of the population needs to have enough discretionary income to keep growth alive as growth is driven by demand. Lack of discretionary income stagnates or kills growth. The strength of the American economy in the 50’s was due to the newly burgeoning middle class being able to spend their discretionary income, not the narrow bandwidth spending of the wealthy.

Until Reagan’s and the conservatives’ attack on the middle class got into full swing our economic model was quite different. One important element was that the vast majority of Congressional members of both Houses had served during WWII. That experience gave them a sense of country and of pulling together for the common good not seen in the Viet Nam generation (my generation). Whether Dem or Rep, everyone understood the concept of compromise and was willing to give in order to get.

Reagan began the destruction of this successful model with the phrase, “It’s your money”. This started a cascade of policies and a manner of thinking intentionally designed to change the country away from one another (the “we”) and have it refocussed on the individual (the “me”). Prior to Reagan’s tax-lowering, debt-financed voo-doo economics, tax rates for drawing out capital from corporate coffers were well over 70% on the top tiers. Under Eisenhower, and throughout the expansion of the 1950’s, top rates were over 90%. These rates achieved their intended purpose of keeping the country funded and keeping corporations healthy. Pensions funds were begun. Wages and benefits rose steadily. Both employers and employees benefitted and the middle class grew.

Reagan’s reduced upper tier tax rates allowed corporate owners and management to take money out of the company and reinvest it for their personal gain. That side of the equation has worked quite well–if you ignore the commercial building, dot.com and real estate bubbles they caused. The result for workers has been wage stagnation at best and a sizable shrinkage of the middle class. same is true for multi-national corporations. Reagan made it easier for them to leave the US, out-source work to nations with cheaper labor, abandon American workers.

Where we used to be the number one creditor nation in 1980, we’re the world’s largest debtor now. Where we used to be the world’s top manufacturing and eporting country, we know export our raw materials and import the finished goods we used to make.

I know what’s wrong and I know who caused it. I don’t knoiw for sure how to get the country back on the right track except that Republicans and conservatives should never again be trusted with the reins of government.

I was one of those that paid very little attention to economics or finances until about 2000. I think the thought was for many on the left was that if you paid too much attention then you became part of the corrupt capitalist system. In 2000, I woke up and from then on I read everything I had time for and watched CNBC and Bloomberg. Although I did take a couple of post grad econ courses, I felt like a sell out and never worked in that area. Maybe part of the reason we were done in by the bankers is that they had the knowledge of how to play the system and we had no knowledge about what they were doing until it was too late.

“Until Reagan’s and the conservatives’ attack on the middle class got into full swing our economic model was quite different.”

rcampbell,

Yours was a comment that I wish I had the talent to produce. Your five paragraphs covered so much recent history and put so many issues in context.

“Reagan began the destruction of this successful model with the phrase, “It’s your money”. ”

You’re on the money pointing out that the creation of this meme has turned everything in American economics topsy-turvy. It wasn’t that no one prior to this “Great Communicator” (translate as a “B” actor’s masterful reading of a
corporatist script of selfishness) held this belief, but that this sound byte was an effective way of selling a concept that really is Darwinian in the worst sense.

Our government has been captured by Wall Street, not only in the campaign contributions they make, but also because of the revolving door into our regulatory agencies. When the same people who work for Goldman Sachs end up running the SEC, that is regulatory capture.

Both parties have been captured at this point. When Obama appointed Summers & Geithner over Stieglitz, I knew there would not be any real changes to the system. Giving the Rubenites so much power was a mistake. You cannot solve problems by hiring the same people who created those problems.

rcampbell and shano have explained the situation correctly and it is a situation most “leftist” understand completely. The “right” just wishes we didn’t.

“I know what’s wrong and I know who caused it. I don’t knoiw for sure how to get the country back on the right track except that Republicans and conservatives should never again be trusted with the reins of government.” (rcampbell)

“You cannot solve problems by hiring the same people who created those problems.” (shano)

A few years ago, I had a small amount of a mutual fund with Janus, and they were convicted of securities fraud, so I filed my papers in order to get the settlement due to investors. I got a letter back saying in effect, yes, I did qualify but the court decided any small settlements did not have to be paid. Only the Big Guys got a settlement. All the small investors got nothing.

While you raise an interesting point, I think even more troubling is that ours is a consumer economy. There is no way that the spending of 1% can support a robust consumer economy.
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The Wall Street Journal disagrees: ” … a Plutonomy – an economy dependent on the spending and investing of the wealthy …” (Graphs of Wrath).

The WSJ is owned by Murdoch. That being said, the definition of a plutonomy doesn’t negate what I said, but rather enforces it. The instability that a plutonomy creates is caused by a lack of adequate consumption to support the model. It’s a compound problem. A vicious circle. A consumer based model (a questionable model at best in terms of longevity but it’s what we’ve got) exacerbated by a lack of said consumption caused by a concentration of wealth into too narrow a bandwidth to keep the model moving. Even with conspicuous consumption of consumer goods by the 1%, that’s not enough to keep the manufacturing machine running which in turn increases unemployment and further negatively impacts consumer spending. Goodbye prosperity. Hello downward spiral.

Great comment rcampbell. The start of the 1% was during the Reagan years and it has continued unabated to this date. Without a change in the tax situation, the economy will not survive. Gene is right that the economy needs a middle class that has the money to buy products and services. The 1% can’t buy us out of a recession, but the 99% can if they are given the chance.

The WSJ is owned by Murdoch. That being said, the definition of a plutonomy doesn’t negate what I said, but rather enforces it. The instability that a plutonomy creates is caused by a lack of adequate consumption to support the model. It’s a compound problem. A vicious circle. A consumer based model (a questionable model at best in terms of longevity but it’s what we’ve got) exacerbated by a lack of said consumption caused by a concentration of wealth into too narrow a bandwidth to keep the model moving. Even with conspicuous consumption of consumer goods by the 1%, that’s not enough to keep the manufacturing machine running which in turn increases unemployment and further negatively impacts consumer spending. Goodbye prosperity. Hello downward spiral.
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Good enough. Avoiding the semantics and rhetoric works.

Exactly who is the consumer is exactly the problem, and exactly where the shift, the morph has centered itself.

Who overwhelmingly has the spending cash is the consumer in that context. That was once the 99% but is now the 1%.

Thus, the dictates of the 1% overwhelmingly determine what happens in the economy now, in terms of what will change things, which is consumption, in which the 1% have the greater say in a plutonomy.

That will perpetuate the static instability unless there is some sort of a meaningful social counter-revolution that benefits the nation, by extinguishing the plutonomy, so that a democratic economy can re-emerge.

That was entirely my unspoken point: the instability cannot be overcome, ergo the fundamental structure of the economy will have to change . Ultimately the dictates of the1%’s in the economy is meaningless if they cannot sustain the economy solely with their consumption, which they can’t. Necessity (or revolution) will dictate change.

That was entirely my unspoken point: the instability cannot be overcome, ergo the fundamental structure of the economy will have to change . Ultimately the dictates of the1%’s in the economy is meaningless if they cannot sustain the economy solely with their consumption, which they can’t. Necessity (or revolution) will dictate change.
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That seems to be the center of the road we are now on.

Rcampbell has nailed the problem with the left’s inability to articulate a cogent economic argument.

“It is your money.” And that is what the left seems to refuse to acknowledge. It is the basic problem with their understanding of the economy. If you dont think the money an individual earns is his, then your entire economic understanding is different.

If you started from the premise that the money an individual makes is his, then we could argue about the proper level of taxation to run a government and the proper role of government to help those who need help. When you argue from the point of view that the money is the governments or society’s and that the government/society gets to decide how much you get to keep then you have problems.

Your money or the governments money? That is the fundamental difference and the question. And that is why the left fails at understanding economics. I dont mean the technical part about money supply and supply and demand, etc.

Even a child knows instinctively that the 5 dollars they got for walking the dog is theirs and not their parents.

Why isnt the money ours if we worked for it? The ditch digger all the way up to the highest paid CEO on Wall St. earned it in one form or another. Either with back or brain.

“It’s you money,” is the meme started by Ronald Reagan as a slogan. It caught on because it snagged the greed gene in all too many people. Greed overrides altruism and common sense. The end result is an ‘every person for him or herself’ which will eventually result in social and economic collapse.

If civilization manages to last another two or three hundred years, I do not think historians of that future time will be kind to Ronald Reagan, despite the attempts of modern conservatives to deify him.

You create a straw man with it’s your money and then support the people who think your money should be theirs, as well as your country should be theirs. It is the ideal of the Social Darwinists who believed in survival of the fittest as long as the struggle was rigged in their favor.

there is nothing wrong with competition as long as it is fair. I do not believe in bail-outs and sloped playing fields in favor of the rich.

I think a good deal of why wealth has been concentrated is because of government and the regulations you think are so necessary to a just society. I think the regulatory environment has caused the skew to favor the wealthy by putting almost insurmountable hurdles in front of the small guy who wants to open a business.

I am in favor of one thing and that is individual freedom only constrained by the original intent of our Constitution. The Constitution has been perverted on the idea that equality can be legislated, it cannot. Even in the state of nature there was inequality and even today there is inequality; in looks, in physical ability, in intelligence, etc. No amount of legislation or regulation is going to change nature.

If equality is so important why dont we make the fastest sprinter in the Olympic games wear an additional 10-20 lbs as a “regulation” to ensure a more fair race?

I dont see the straw man because I am not in favor of favors to anyone.

Spending and consumption dont grow an economy, converting lower order goods to higher order goods does. So yes the left sucks at economics but its certainly not because of yuppies, diversity, corporate money or academic disinterest as the author of that article inanely suggests.

“the federal reserve has a magic wand that makes the paper it prints real money and all other money counterfiet. If you can accept this explanation then the world makes sense, if you dont it appears that most of the world is run by raving lunatics or outright charlatans”